Note for all tutorials: You must prepare all the tutorial questions and problems.

However, due to time constraints, it may not always be possible to discuss all the
problems during a particular tutorial. Consequently, your tutors will choose at their
discretion the ones to be considered during the tutorials. Where a question is taken from
your prescribed text, then the relevant page number(s) of the text is provided.

Tutorial - 1

c.

1.

This is a revision question which covers notions that you should already know
before starting Law of Business Organisations.

a.

What are the sources of the law in Australia?

b.

Who creates statute?

Distinguish between a federal and unitary form of government.

---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------d.

Give an example of a statute enacted at a State level.

e.

Give an example of a statute enacted at a Federal (Commonwealth) level.

f.

Common law and equity are judge made laws. Is this statement correct?

g.

Why it is still important to distinguish between common law and equity?

h.

If the common law/ equity rule principle contradicts what is stated in the Statute,
which source of law will prevail?

i.

When dealing with a crime, who is taking action against the offender (the person who
committed the crime)?

j.

What are the elements that need to be proven for a crime to be committed? Explain
the elements.

k.

Mention some important differences between civil and criminal law? What is a strict
liability offence?

2.

Mention three differences between partnership and joint venture.

3.

The Festival Club is an unincorporate association, which organises entertainment

activities. Further, it runs every Saturday (at 2pm) a carnival on the property leased
from Operator Pty Ltd. Joe, Teyla, Tanver and Tong, the elected members of the
committee, signed the lease agreement as agents of Festival Club and as agents of
the members of the association. The lease was for four months and is renewable.
However, after two months of signing the lease, Festival Club stopped any payment to
Operator Pty Ltd due to a lack of income.
a. Advise Operator Pty Ltd on the liability of the different parties.
b. Would your answer be different if Festival Club is an incorporated
association? Who would be liable then?

4.

Alison, Bob, Carol and Fred propose to embark on a venture involving the development and
marketing of a high-tech discovery, which Alison has made. The discovery (which involves a
new process for instantaneous transport of persons and materials over distances of up to 10
million kilometers) has not yet been fully tested. Alison has only tested her invention on
eggshells, which she has transported over distances of up to 100 meters, and there is a
significant risk that it may not prove commercially feasible.
The discovery will require $30 million to fund research and development. If the discovery
proves viable, it will require further finance of at least $120 million to set up factories,
acquire tools and equipment and the associated costs of the manufacture and marketing of the
product. The provision of such finance is clearly beyond the combined capacity of Alison,
Bob, Carol, Eliza and Fred. In addition, the venture will require significant inputs of
advanced technological skills in nuclear physics and particle beam physics which is well
beyond the ventures competence.
In terms of contributions to the project:
Alison made the initial discovery of the particle transfer technique.
Bob is a marketing whiz whose expertise will be required in due course.
Carol will be providing some of the initial R & D finance.
Fred has unique management skills, which will be essential to the commercial success of
the venture.
If the venture proves ultimately successful, the profits are likely to run into many millions of
dollars per year.

ADVISE the parties on the most suitable form of business organisation for the
proposed venture. In the course of your answer, analyse each of the available forms
of business organisation, and discuss the unique and comparative advantages and
disadvantages of each form.

Partnership Questions
5. Bob and Joshua are best friends. They decide to run a flower shop together. They
agree that Bob will be responsible for leasing suitable premises to run the business
from, while Joshua will be responsible for buying the equipment that they need to run
the flower shop. Both parties are very excited about the project. Joshua finds pots
that he likes and he believes those pots will be great for the business. He orders one
hundred of them from Jane. Jane then sends the invoice and the pots to Bob, who
takes delivery of the pots. However, before any other transaction takes place, Bob
and Joshua have an argument and are no longer speaking to one another. Any plans
for running the business together have now been completely dropped. Jane has not
been paid for the pots she supplied.
Advise Jane as to whether a partnership exists between Bob and Joshua. Why do
you think Jane wants to prove that there is a partnership between Bob and
Joshua?
[Hint: this problem requires you to determine whether the statutory requirements of a
partnership have been satisfied. You must refer to the relevant section(s) of the
Partnership Act and also the appropriate cases to support your answer)
6.

Jack and Claudia ran a chocolate shop called Delicious, as a partnership. The
business was successful, until Haighs Discount Chocolates opened up next door.
The fierce competition caused the profit of Delicious to be halved. Unhappy with
this outcome, the partners decide to obtain a loan from Major Ltd in order to finance a
series of advertisements to attract the cliental back to the store. The agreement
between the partners and Major Ltd noted the following:
a
b
c
d
e
f

The lender will receive a share of the profits and losses to the extent of 5%;
The partners will not be able to dispose of the property of the partnership without
the lenders approval;
The lender has a right to examine the partnership books at will;
The lender has a right to receive a quarterly business statement;
The lender can interfere in the management of the business and
The money advanced is a loan and the lender is not to be regarded as a partner of
the business.

Advise the parties as to whether a partnership exists between Delicious (the

chocolate shop) and Major Ltd (the lender).
[Hint: you only have to determine whether a partnership exists between Delicious and
Major Ltd. The facts tell you that Jack and Claudia are in partnership, so you do not
have to prove this. Again your answer MUST be supported by the case law and
relevant section(s) of the Partnership Act.]
7.

Jack was employed by Peter to work on a farming business operated by Peter on a 500
hectare property called Kapooka. Peter had an arrangement with Richard, the owner
of Kapooka, to have the use of 100 hectares of his property to cultivate his crops.
Peter was also entitled to use other parts of the property to graze his own cows for the
dairy business. In return, Peter agreed to pay Richard half the gross proceeds from the
sale of the crops. Jack was injured and sued both Peter and Richard, as he claimed
they were partners.
4

Richard seeks your advice as to whether Jack can make a claim against him for
his injuries. Why do you think Jack is trying to claim against both Peter and
Richard?
Advise Richard
[Hint: are Peter and Richard partners? You must support your answer with the
relevant section(s) from the Partnership Act and the appropriate case law. Please do
NOT try to answer this question on the basis of either workers compensation and/or
insurance law.]
8.

Josephine and Marcus are best friends and they decide to set up and run a restaurant.
They plan to open the restaurant in 5 February 2010. To prepare for the grand
opening, they agree that they are agents of each others: Josephine will be in charge of
leasing suitable premises to run the business from and will be in charge of hiring the
employees. Marcus was responsible for buying the equipment that they need to run
the restaurant.
Both parties are very thrilled about the project for they believe that the business when
it is up and running would generate tens of thousands of dollars a week. On December
2009, Josephine finds suitable premises for the new restaurant and she consequently
leases these premises. Further, Josephine and Marcus opened a joint bank account for
their business. They plan to share equally the profits and losses from the business. On
5 January 2010, Marcus buys the furniture for the business which subsequently is
delivered to the newly leased premises.
However, on 27 January 2010, Josephine and Marcus have a dispute which leads to
the end of their commercial relationship. Any project of running the business together
is scrapped. However, issues such as payment of creditors and division of assets
between Josephine and Marcus remain.
Advised Josephine and Marcus on the nature of the business.